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Last Update: 16-Feb-12 10:49 ET
Core PPI Grows Faster than Expected
Headline producer prices increased a modest 0.1% in January after declining 0.1% in December. The Briefing.com consensus expected headline PPI to increase 0.3%.
Energy prices declined for the fourth consecutive month, falling 0.5% in December. An unexpected 1.7% decline in residential power prices and a 3.4% drop in residential gas costs more than offset a 2.0% increase in gasoline prices.
Food prices fell 0.3%, which is the second consecutive monthly decline.
Outside of food and energy, core PPI prices increased 0.4% in January. That was up from 0.3% growth in December and the biggest increase in core producer prices since July 2011. The consensus expected core prices to increase 0.1%.
Nearly 40% of the increase in core prices was due to a 2.0% increase in pharmaceutical preparations. While pharmaceutical costs have increased over the past few months, a 2.0% jump is well above the normal growth range. We expect pharmaceutical price growth to slow down, if not contract, within the next few months.
A 0.9% increase in light motor trucks was also a key contributor to the larger-than-expected rise in core PPI.
Energy prices declined for the fourth consecutive month, falling 0.5% in December. An unexpected 1.7% decline in residential power prices and a 3.4% drop in residential gas costs more than offset a 2.0% increase in gasoline prices.
Food prices fell 0.3%, which is the second consecutive monthly decline.
Outside of food and energy, core PPI prices increased 0.4% in January. That was up from 0.3% growth in December and the biggest increase in core producer prices since July 2011. The consensus expected core prices to increase 0.1%.
Nearly 40% of the increase in core prices was due to a 2.0% increase in pharmaceutical preparations. While pharmaceutical costs have increased over the past few months, a 2.0% jump is well above the normal growth range. We expect pharmaceutical price growth to slow down, if not contract, within the next few months.
A 0.9% increase in light motor trucks was also a key contributor to the larger-than-expected rise in core PPI.
